Crisis of the Week: Areva SA’s Falsified Records Problem

A woman takes a picture of the construction site of the European Pressurized Reactor project in Flamanville, France, on Nov. 16.
Photo:
Agence France-Presse/Getty Images.

This is a weekly commentary by external experts.

Areva, which manufactures parts for nuclear power plants, is under the crisis microscope after reports alleging company employees for decades hid information about problems with some of its products. Inspectors from the U.S. and five other nations are investigating the company’s internal records, prosecutors in Paris are looking into the matter, and there’s a question of whether any of the company’s parts pose a danger to reactors world-wide.

Areva executives have acknowledged the records falsifications and blamed them on a breakdown of manufacturing controls spanning many decades. The executives said the falsifications stopped in 2012, and that the company has since tightened its controls and is cooperating with the regulators’ reviews.

Using the company’s statements, the experts take apart its communications response, pointing out the good, the bad and the ugly.

Lanny Davis and Josh Galper, co-founders, Davis Goldberg & Galper: “Areva followed one of the three rules of crisis management: It allowed a key manager to take responsibility for what was described as a massive ‘coverup’ of defective parts delivered to nuclear power plant customers around the world going back decades. “We’re facing a problem of ‘quality culture,’” said David Emond, a senior executive at the key Areva French facility, Le Creusot Forge, where defective steel components for nuclear power plants were sold.

“But it appears Areva has not yet followed the two other important crisis management rules: get all the facts out quickly and set out a remediation program to assure stakeholders the cover-up culture described by Mr. Emond has changed. For example, we could not find a ‘fact sheet’ on the Areva website describing the basics of what happened, and we saw no reference to a remediation plan to ensure this would never happen again. The coverage reflects this, as regulators and outside observers--and not the company--are driving the media narrative.

“It’s possible Areva doesn’t want to be too proactive with the media for fear of exposing the company to increased liabilities. However, our advice would be for the company to develop a single strategy combining and reconciling legal and media strategies.”

Halsey Knapp, partner, Krevolin Horst: “Areva SA’s Le Creusot forge in central France is a brand-name manufacturer to the world’s nuclear reactor industry, so when regulators published reports of a decades-long coverup of manufacturing problems, the stakes for Areva could not be higher. When your business is nuclear power, good is not good enough; trust is paramount. Coverups poison public regard and the public rarely forgives or forgets. These dire circumstances mandated an aggressive response.

“But Areva missed several, early opportunities to address its public perception. Having detected fabricated reports in 2012, self-disclosure--rather than regulator discoveries--would have blunted criticism. Management had the opportunity to be in front of the story and missed it entirely. Even today, management should be vigorously and publicly uncovering the truth of its past. It should have prepared a complete history readily accessible for inspection and invited verification of its findings from leading independent authorities. Areva, and not regulators, needed to be the authoritative source of what they are doing, how they are implementing corrective action and who is paying the consequences for its past failings.

“Instead, management’s response was to issue no apologies and no meaningful public statements; instead it just confessed it lacked a ‘quality culture’ that would have encouraged employees to self-report mistakes. Areva lacked a quality crisis management response.”

Carreen Winters, global corporate reputation practice leader, MWW PR: “As a key supplier for an industry already struggling with public trust and confidence, the idea a company would take short cuts at the expense of public safety raises serious questions about the operational controls at Areva and the judgment of its leadership team that no amount of ‘cooperating with investigators’ can remedy. This comes on the heels of a controversial ouster and subsequent investigation of its former chief executive.

“Although Areva has put out periodicupdates over the past year, they are riddled with technical jargon and legalese, providing little to answer important questions or reassure its constituencies, particularly people living in communities near potentially compromised nuclear reactors. Perhaps even more damaging is the lack of contrition or real accountability beyond a passive pledge to ‘cooperate with the investigation.’

“This situation is in its early stages…but the company has a diminishing window of time to change the course of this situation. It must begin with a transparent discussion of what happened and why, followed by clarity about what management knew and when it knew it, as well as the remedies to prevent these situations in the future. This would go a long way toward demonstrating a seriousness around safety and a commitment to change as a first step in rehabilitating its reputation. Areva has a short window to correct its communications and to commit to change if it hopes to rebuild its reputation and its standing among customers, regulators, employees, NGO’s and communities around the globe."